OCBC is now coal-free: Singapore bank drops out of final coal project

The bank's move away from the 1,200-megawatt Vung Ang 2 coal plant in Vietnam has been praised by environmentalists, who say that unlike rivals that have claimed to stop funding the single biggest contributor to greenhouse gas emissions, OCBC is "walking the talk".

Asia's continuing investments in coal is running contrary to the ambition to reduce global GHG emissions and avert climate change impacts which were raised in Paris in 2015. Image by Johannes Plenio from Pixabay

“OCBCs decision to withdraw from the funding consortium for Vung Ang 2, one of the most controversial coal projects in Asia, shows what it really means to implement a coal policy and stick to it,” commented Julien Vincent, head of non-governmental organisation Market Forces, which has been campaigning for banks to quit coal in Southeast Asia.

“While OCBC is walking the talk, other banks such as DBS Bank and Standard Chartered Bank, which have also promised to stop funding coal, remain involved in new coal projects, making a mockery of the policies they have only just introduced,” he said.

Singapore-based DBS announced it would quit coal two days after OCBC in April, but the bank continues to support coal projects such as Vung Ang 2 and has said it will only stop coal funding by 2021, once existing deals have been completed.

In an interview with Eco-Business in April, Maarten Biermans, the head of sustainable capital markets for Dutch bank Rabobank, pointed out that it will get harder for banks to resist coal financing the more of them withdraw—even with the growing risk of stranded assets and the increasing reputational damage that coal financing does to a bank’s brand.

“The last investor to leave the coal business will have the highest opportunity cost,” he said. “The sources of capital [for coal] are getting smaller as more banks exit, meaning that the cost of capital will rise. So the banks that stay in that game the longest will make the most money—and that income will increase as more banks quit coal.”

The number of newly completed coal plants fell by 20 per cent last year, with more than 100 finance institutions worldwide quitting the fossil fuel, the burning of which is the single biggest contributer to man-made greenhouse gas emissions.

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